Although Misunderstood, The Texas Railroad Commission Is A Name Worth Saving

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For the third time in four sessions of the Texas Legislature, the Texas Railroad Commission (RRC) finds itself facing another Sunset review. The state’s system of government is managed by a set of commissions rather than bureaus or agencies, and each commission must undergo a legislative review and re-authorization every 12 years. With an initial hearing by the Sunset committee set for later this month, everyone involved is hopeful this third time will be the charm.

The RRC, which is led by three elected commissioners who serve staggered, six year terms, was originally up for Sunset review in the 2011 session of the legislature, which meets for 140 days in odd-numbered years. But contentious pre-session hearings were followed by a major effort to change the make-up of the commission itself from three commissioners to a single commissioner. That effort, along with conflicts over several other matters, prevented the house and senate from reaching agreement on a 12-year reauthorization. So in the session’s final days, leadership in both houses and then- Governor Rick Perry agreed to kick the can down the road for two years and try again in 2013.

But two years later, the effort for a full reauthorization for 12 years once again ran aground. While there was no real move to reduce the number of commissioners, house and senate negotiators were unable to reach agreement on a number of other issues, including whether or not to move the RRC’s contested case hearing responsibilities to the State Office of Administrative Hearings. So once again the can was kicked, this time for four years instead of two.

So now the dance begins again and hopefully this time the can-kicking can be avoided.

One proposal that has been a part of both prior efforts and will certainly arise again this time is a proposal to change the Commission’s name. Obviously, the RRC was chartered in 1876 to establish regulatory authority over the state’s system of railroads; thus, the name. It was not until 1917 that the legislature conveyed authority to the RRC to begin regulating various aspects of the oil and natural gas industry. By the time, decades later, the authority to regulate railroads was transferred to the Texas Department of Transportation, the name of the Railroad Commission was firmly implanted in the public’s mind, both in Texas and globally. No one in Texas at that time even entertained the notion of changing the name of what had become a very high profile body with a global reputation.

This is because, beginning in the early 1930s, the Texas Railroad Commission basically set the price of crudeoil on the global market through its system of prorationing and allowables that governed Texas’s vast crude oil production. This only began to change in the 1960s, with the establishment of and assertion of power by the OPEC cartel.

But about a decade ago, the move to change the RRC’s name began to gain momentum, as candidates for the commission seats began to complain that when they talked to audiences about running for the Railroad Commission, most folks thought they would be regulating railroads, not the oil and gas industry. Obviously, this reality makes campaigning for the office more complex and difficult. As the industry’s presence in the state has rapidly increased with the advent of the 21st Century shale boom, anti-industry activists also began to make the RRC’s name an issue, often laughably implying the name is an effort to deceive the public.

Because of this dynamic, each of the last five or six sessions of the legislature has seen proposals that would change the name to something more descriptive, with the most frequent alternative being the Texas Energy Commission. That proposal will most likely become a part of this year’s Sunset Commission’s set of recommendations.

The problem is that that name would also engender misunderstandings about the Commission’s role. The RRC, after all, does not regulate wind, solar, hydroelectric power or various other forms of “energy”. Nor does it regulate the state’s electricity grid, the largest distributor of “energy.” So complicating questions would still come to candidates for the office – they would just be different questions.

Another proposed name change that has been brought up over the years is the Texas Oil & Gas Commission. Again, not accurate, since the RRC is also responsible for regulating the production of hard rock minerals in the state.

And then there’s the price tag for making the name change, the current official estimate for which is about half a million dollars. This seem unrealistically low, given that a name change would involve changing all Commission documents, letterhead and signage, including tens of thousands – if not hundreds of thousands – of official Commission permit signs that accompany every well site, pipeline, compressor station, processing plant and refinery in the state.

The real cost of changing the name would certainly end up running into the millions of dollars at a time in which the state is most likely going to be facing a significant budget shortfall and the RRC itself is unable to retain employees due to a non-competitive salary structure.

All of which brings us to a much more logical, cost effective solution to this problem (which honestly really is not much of a problem at all): Rather than change the name of a 140 year-old body that is known and respected around the world, why not just change the way the commissioners themselves are selected? Instead of having them be elected by a largely ignorant voter base, why not just let the governor appoint them to their six year terms?

After all, while most voters may not know what the Railroad Commission does, they do know what the governor of the state does, and if they’re worried about how the oil and gas industry is being regulated, they can factor that concern into their decision making on voting for the state’s highest office.

Simple.

The Texas Railroad Commission is a uniquely Texas institution. While the name itself is illogical, the Commission itself has played a major role in the history of not just the Texas oil and gas industry, but the global industry as well.

This is a name that is truly worth saving. If there is a problem that really does exist, there is a far simpler – and cheaper – way to resolve it.